Greater New Orleans

ACORN board votes to dismiss suit

At a historic meeting over the weekend, ACORN's national board voted to dismiss a lawsuit filed by several of its members who sought access to financial records that might shed light on what became of the money embezzled from the nonprofit by the founder's brother.

Two board members, Karen Inman and Marcel Reid, filed suit in August seeking bank statements, contracts and other information on behalf of the entire board. The group's chief organizer questioned their authority to bring the suit, however, and over the weekend the board as a whole asked them to rescind it.

Inman and Reid nonetheless appear to have won the access they sought in the lawsuit. Their attorney, James Gray II, said Monday that the board had instructed the accountants holding the records to cooperate with an investigation into a repayment plan that founder Wade Rathke helped set up in lieu of criminal proceedings against his brother, Dale Rathke.

An ACORN spokesman confirmed that account and issued a statement on behalf of president Maude Hurd, who said the board "is moving in a positive manner for a speedy resolution in the best interest of the organization."

Gray said the board has appointed a six-member committee, including three supporters of Reid and Inman, who will negotiate how the inquiry should proceed and who should spearhead it. His clients also maintain a mandamus action in civil district court in which they seek individual access to financial records, as opposed to access on behalf of the entire board.

"Everyone agreed they needed to have an orderly continuation of the investigation the lawsuit was designed to assist," Gray said. "That meant the person in possession of the records would turn those books over to those persons conducting that investigation. The only thing that still has to be worked out is who conducts the investigation and whether all parties are satisfied that it is thorough and adequate."

At one point during the marathon weekend meeting, the delegation from California made a motion to remove Inman and Reid from the national board. Inman said the motion was tabled while the group of six negotiates how the inquiry into the embezzlement scandal should proceed.

"I think the major sticking point is and will continue to be that we want a forensic audit to see what happened," Inman said. "I don't know that we can really right this ship unless we know."

The 51-member national board convened in New Orleans on Friday to discuss the status of the lawsuit and other pressing matters, including Wade Rathke's future involvement in the organization. Rathke left ACORN in June, and he now serves as chief organizer of ACORN Interntional, which does social justice work abroad.

Rathke said by e-mail that his group is "entirely separate" from ACORN, but Inman said he continues to exercise influence over the nonprofit as a whole. Over the weekend, the ACORN board appointed a committee to disentangle whether and how ACORN International fits into the nonprofit's extended family tree.

Kate Moran can be reached at kmoran@timespicayune.com or 504.826.3491.